Offshore Affrontery

I am ashamed to confess that since retirement I had become something of an ostrich – burying my head in the sand, as it were, by only rarely keeping up with the news. I think it was because I used to get a daily dose of news from Radio 4 driving to and from work and, when that journey stopped, I failed to adjust my habits.

The current financial debacle has changed all that. Suddenly, with our life’s savings either invested in shares or entrusted to banks, I have a vested interest in being interested again. A crisis is quite an educational process, though sometimes the lessons are learned a little too late. Banks going under is a relatively new phenomenon and quite suddenly, whereas the guarantees offered by the FSCS used to seem of little relevance, they now seem absolutely crucial. 20-20 hindsight is always wonderfully clear.

We personally have rather too much cash currently locked away in one of Iceland’s famously failing financial institutions and we are, of course, both relieved and very grateful that our government has expressed its intention to underwrite all personal investments. It is clearly going to take some time to sort out but at least the situation looks more hopeful.

Today’s new lesson came while listening to the Channel 4 news at 7:00 PM. It broadcast a story about Icelandic offshore accounts administered in places such as the Isle of Mann and the Channel Islands not being covered by the FSCS. I had once very briefly dabbled with an offshore account but dropped it, not because I realized any limitation but simply because it didn’t suit me. In this shambles, holders of those Iceland-mismanaged offshore bank accounts now seem to be disturbed by their lack of cover, quite naturally, I suppose. They want the Chancellor to cover their loss as well, just like every one else.

Wait a moment, though. The point of an offshore account is to avoid paying any tax on interest accrued to the UK government, isn’t it? So, having deliberately taken steps to avoid paying anything to it, they now expect the very taxation system that they did their level best to avoid to extend to them the same benefits afforded those of us who did, at least, pay something for the privilege?